


Welcome to Foreign Policy’s China Brief.
On Monday, China’s biggest earthquake in a decade hit the western province of Gansu, killing at least 120 people. The natural disaster is another blow in a year full of them in China, where public worries about the future are growing worse by the month. Below, we’ve rounded up six top stories and trends from a difficult year for China and its people.
COVID-19 Hits Hard
In China, the year began midway through a massive wave of COVID-19 infections, which started after the government abruptly lifted the country’s zero-COVID policy in December 2022. On Feb. 16, Chinese President Xi Jinping declared that China had triumphed over the virus. Officially, the country’s death toll had only reached 83,150 during the entire pandemic. In reality, estimates at the time placed the number of total deaths at around 1.5 million.
COVID-19 is still taking a slow toll on the Chinese public, but criticizing the government’s response remains verboten. A strange silence has settled over discussion of COVID-19, both from official censorship and—as elsewhere in the world—a desire to forget the collective trauma of the pandemic. To top it off, an outbreak of antibiotic-resistant pneumonia among children, plus cases of COVID-19 and flu, have led to crowded hospitals in recent weeks.
Missing Jobs
The big bad news of the year for China was economic. The country’s economy has struggled to recover from the impact of COVID-19 shutdowns, and long-running structural problems have become impossible to ignore. The economic data has been troubling all year, and it’s not getting better. Foreign investment has plummeted, and capital outflows have grown sharply.
Meanwhile, although job numbers have somewhat recovered on paper, official figures are highly unreliable, and the picture on the ground is depressing. Youth unemployment in China has reached such highs that the government stopped publishing the statistic this year. The International Monetary Fund, based on Chinese official data, has predicted that China’s GDP grew by more than 5 percent this year, but it’s unclear if that is anywhere near the truth.
The outlook seems the worst for new graduates, who face the kind of bleak job market that young Americans did amid the 2009 financial crisis. Despondency about the value of education is spreading, with graduates comparing themselves to Kong Yiji, a failed scholar from a famous 1919 short story. Young Chinese aren’t just “lying flat” by choice—they are being crushed.
Savings Over Spending
A driving factor in China’s economic crisis is that people simply aren’t spending—a major problem given that boosting domestic consumption has been key to Chinese economic hopes for years. This is in part because the Chinese government was stingy with aid to households during the pandemic; massive spending on enforcing the zero-COVID policy left local authorities with few fiscal options to support the public.
The last three years have also seen successive government crackdowns on parts of the private sector, leading to job losses in everything from game programming to school tutoring. All of this has made people more aware of the arbitrariness of government power and the risk that comes with it. Economic optimists hoped these crackdowns might end this year; instead, they have expanded to other areas, including health care.
After three years of waiting for potential COVID-19 lockdowns and with jobs disappearing at the government’s whim, it’s no wonder people in China don’t have a lot of confidence in the future. That has led to more reluctance to get married, adding to the looming demographic crisis. As many people feared, China seems to be getting old before it gets rich.
Property Bubble About to Burst
Yet even Chinese savings aren’t safe. Property is the overwhelming vessel for wealth investment in China, where 70 percent of household assets are tied up in property. For two decades, property prices soared faster than the rest of the economy. Now, China’s real estate developers are nearly bankrupt and the sector is in slow-motion collapse. The government has worked hard to prop up the prices of new homes, but they’re still falling; the secondary market is even worse.
The property bubble isn’t only affecting households. At its peak, real estate made up an estimated 25 percent to 30 percent of China’s GDP, with companies nominally doing business in one sector parking most of their capital in the property market. Local governments became dependent on land sales to developers for revenue—and for kickbacks for officials. As a result, the collapse of the market threatens to explode the ticking bomb of local government debt.
Xi’s Insecurity Hits the Leadership
Chinese President Xi Jinping speaks after introducing members of the Chinese Communist Party’s new Politburo Standing Committee in the Great Hall of the People in Beijing on Oct. 23, 2022.Noel Celis/AFP via Getty Images
All this uncertainty is taking place amid an ever more closed-off and paranoid political environment. FP’s Howard W. French, who lived and reported in China in the early 2000s, was shocked by what he found when he visited the country for the first time in years in July. He wrote that COVID-19 isolation and government-fueled xenophobia have led a country that once wanted to embrace the world to close off from it instead.
Xi’s own paranoia came back to bite China’s top political leadership this year, as he put even greater emphasis on national security. Although there is no sign of concerted opposition to his control, the purges of rivals or perceived threats that began in 2013 have never really ended under Xi. Two incidents drew particular attention this year: the disappearance and removal from office of both Chinese Foreign Minister Qin Gang and Chinese Defense Minister Li Shangfu.
Neither official was at the very top of the political system; in China’s bifurcated leadership, one’s Chinese Communist Party (CCP) role is more important than one’s government role. Qin and Li were still significant players handpicked by Xi. There are abundant rumors—a possible extramarital affair carried out by Qin and corruption by Li—but it’s still unclear why they fell from grace so abruptly after just months in power.
Ultimately, the CCP is bruised—but it’s still in charge, and there is no hesitation about crushing any attempt to change that.
FP’s Most Read This Week
- Why China Is Stepping Up Its Maritime Attacks on the Philippines by Elisabeth Braw
- Germany Is Thinking of Simply Banning the Far Right by Paul Hockenos
- Is There Such a Thing as a Global South? By C. Raja Mohan
Tentative U.S.-China Reconciliation
The big question for the world beyond China is whether a weakened Beijing will take a more conciliatory approach toward Washington—or if it feels it has something to prove. For most of the year, especially after the spy balloon panic in January and February, the latter seemed more likely. Chinese media remained hostile toward the United States, which got more aggressive with sanctions—especially around critical semiconductor technology—despite China fighting back.
But after a surprisingly successful meeting between Xi and U.S. President Joe Biden in November, the outlook for the relationship improved a bit. China may be more willing to bide its time rather than risk challenging the United States directly—or it may just be waiting for a new president.
However, the relatively good mood has been tempered in recent weeks. The United States has accused China of attempted interference in the 2022 midterms, following similar attempts in Australia and Canada. The bipartisan U.S. House select China committee has called for strong decoupling of the world’s two largest economies. And China has started another round of aggression against its maritime neighbors, especially the Philippines.